Lancaster team takes helm of Hawaii-based clean energy company

By Tim Stuhldreher,
November 12, 2010 at 3:00 AM
- Last modified: February 15, 2011 at 11:22 AM

A few years from now, if all goes well, tropical islanders worldwide will look to Lancaster for their clean energy needs.

As of Jan. 1, the headquarters of Ocees International Inc. will relocate from Honolulu to the midstate, where three venture fund executives — Jeremy Feakins, Ed Baer and Jim Greenberg — will oversee strategy and operations.

Ocees is on the verge of commercializing a nonpolluting electricity generation technology known as ocean thermal energy conversion, or OTEC, they said.

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Jim Greenberg, left, Ed Baer and Jeremy Feakins meet at the former Rebman property at 800 S. Queen St., which in January will become the headquarters of Ocees International Inc. The three are part of the management team and board of the company that hopes to commercialize a clean electricity generation system known as ocean thermal energy conversion. Photo/Amy Spangler

The firm is looking at a multi-billion dollar market potential over the next decade, Greenberg said.

“This is going to be growing by leaps and bounds,” he said.

Feakins, Baer and Greenberg formed JPF Venture Fund last summer. Ocees became JPF’s first client a few months later.

The three became part of Ocees’ management team and board last month, with Feakins as CEO and board chairman, Ed Baer as chief financial officer and Greenberg as chief marketing officer.

Ocees’ other executives are Harry Jackson, president and chief operating officer; and Stephen Oney, executive vice president and chief technical officer.

The transition from investing in Ocees to managing it was a planned part of JPF’s strategy from the start, Greenberg said. Ultimately, JPF hopes to take Ocees public, he said.

OTEC systems generate electricity by using the temperature differential between sun-warmed ocean surface water and near-freezing water pumped up from the ocean depths. In “open cycle” systems, the warm water is turned to steam, drives a turbine, then is cooled by the cold water; in “closed cycle” systems, the turbine is driven by another fluid alternately warmed and cooled by the water sources.

The technology is most suitable to places where fossil fuel is expensive to import and surface water temperatures are highest — mainly tropical islands such as Hawaii, Guam or the Philippines.

One byproduct of the open-cycle process is desalinized, potable water — another crucial benefit for islands with limited freshwater resources, Feakins said.

Ocees hopes to build 10 OTEC plants over the next five years or so, Feakins said. Each $80 million to $100 million plant would produce hundreds of millions of dollars of energy over an operating life of 25 to 30 years.

Ocees was founded in 1988 and was a consulting firm for many years. The name stands for Ocean Engineering and Energy Systems.

In 2001, Ocees hired Oney to reorient the firm toward OTEC. After 9/11, the firm realized the era of cheap fossil fuel was ending, Oney said. That opened an opportunity for renewables.

The concept of ocean thermal energy conversion has been around since the 1880s, Oney said. The first experimental plant to successfully produce electricity was built in Cuba in 1930.

While OTEC isn’t especially exotic from an engineering standpoint — “It’s not rocket science,” Oney said — the technology has its limitations. They include inherently low energy conversion efficiency as well as the expense of deploying a large cold-water pipe strong enough to withstand ocean currents and storms.

For the last decade, Ocees has worked to find competitive niche markets and lower the cost of expensive components, Oney said.

“We are on the cusp of commercialization,” he said.

Small systems generating energy in the 100-kilowatt range have been built. The next step is commercial-scale 5- to 10-megawatt systems, Oney said. Systems of 20 megawatts or more should be feasible, he said.

The company is meeting with utilities worldwide about power purchase agreements or PPAs, long-term contracts to supply electricity, Greenberg said.

“This company has done excellent marketing in a variety of locations around the world where the need is tremendous,” he said.

Ocees hopes to announce its first PPA within the next few months, Greenberg said.

As the technology is adapted and scaled up, more companies will find it profitable to develop off-the-shelf components, driving prices downward, Oney predicted.

“We’re anticipating that kind of cost-effective progression,” he said.

Not everyone is convinced that OTEC is close to commercialization. Desikan Bharathan is principal engineer at the National Renewable Energy Laboratory in Golden, Colo., and has worked on OTEC research for more than 15 years.

“There isn’t adequate expertise in doing this kind of thing on a larger scale,” he said. “There is no track record.”

The industry needs to scale up in smaller steps, he suggested. Still, he said: “In the long run I believe they (OTEC plants) can be very beneficial, especially to island nations.”

Oney, a Bucknell University graduate, praised the JPF team’s approach. He said it’s important for tech experts to realize they can’t do everything, and to be willing to seek help in growing a company from business people with the appropriate expertise.

JPF will move Ocees’ business operations, including executive, financial, sales and marketing functions, to Lancaster’s Rebman Building at 800 S. Queen St. Ocees’ research, design and engineering functions will remain in Hawaii.

Ocees will hire “a couple dozen” people in Lancaster in the first few months, and envisions creating 25 to 75 jobs in the next one to three years, Feakins and Greenberg said.

The South Queen Street location includes an office building and a 30,000 square foot warehouse.